Where the obligor promises the obligee, in the event of their failing to perform their obligation or failing to do so properly, payment of an amount of money as a penalty, the penalty is payable upon the obligor being in default. If the performance owed consists of forbearance, the penalty is payable on breach.
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Book 2 · Law of obligations › Title 4 · Earnest, penalty for breach of contract › Section 339
Payability of penalty for breach of contract
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